Better Revenue Models: Pay What You Want – Not Crazy After All These Years?

Pay What You Want (PWYW) pricing has gotten some attention in the past few years, but most people still dismiss it as naively utopian, only suited to very special situations.

I have posted a survey of a growing body of research and real use that suggests that it has much more value than most businesses realize, in a wide range of situations. Many of you know of Radiohead, and now there is the Freakonomics movie preview, but there is a lot more to think about. A blog post with a link to this survey is at http://www.fairpayzone.com/2010/10/pay-what-you-want-still-crazy-af....

What is more, I suggest that an enhanced form of PWYW can be applied to ongoing Internet relationships, using feedback on how well people pay, to gate access to further PWYW offers as a special privilege. This FairPay process enables behavior like a freemium model that can be far more simple, fair, adaptive, dynamic, and profitable. It is especially relevant to digital content but can apply to other products/services. More on this is at http://teleshuttle.com/FairPay.

(It seems PWYW and FairPay are patterns, in that they deeply alter many other building blocks of the canvas, especially on the customer-facing right side.)

Replies to This Discussion

I don't have any practical experience of this business model but it makes an enormous amount of sense to me although I do buy people a drink if they are nice to me

I had an idea for a business that would take over from standard branded journalism and freebee papers. It works like this:

1. The free newsite is open to journalists and readers
2. Readers must buy some credits - they get $5 free credit when they sign up
3. If they read an article they are invited to donate some of their credit to the author - they are under no obligation to donate anything
4. A chart is produced which ranks artcles by the amount donated - this subdivided by topic - e.g. sport, politics, business etc etc
5. The site could also makes money from advertising

so you see we have a sort of Open newspaper but one which rewards the producers of the copy - the better the copy the more they will earn.

Yes there are some close approximations to that, and they work across a network of sites/publications -- katchingle .com and flattr.com.

Interesting idea, and seems promising, with some apparent success.

What FairPay adds to such PWYW variations is the idea of tracking feedback on how individuals pay, and selective/gated control of who gets such offers (based on that payment history), so only those who pay fairly continue to benefit. That can motivate prices that are much more fair to the seller (and still acceptably fair to the buyer). That makes FairPay much more suited to broad commercial use by serious media businesses that need a fair profit, not just token contributions.

I know of a restaurant in Singapore that has this model. The hook, however, is religion. The restaurant is run by a Hindu group associated with an ascetic who is known in the Indian community. So it would be fear or respect that makes people pay, and some pay more and others less based on ability. But what is interesting is that even non-Hindus frequent that place for the quality of food, so much so that it is crowded at lunch times.

I see a correlation here in the Milwaukee, WI (USA) area with a food coop that has three locations (Outpost Natural Foods).

This coop provides organic food and other organic consumer goods that incur premium pricing that is in effect PWYW. One could opt for the less expensive alternatives to organics and therein lays the PWYW. The choice is to pay a bit more for organics or less for the alternatives.

The question then becomes: Pay me now or pay me later?

Organics = pay me now, and the alternative is pay me later (health and environmental concerns).

The long-term benefits to human health and the environment regarding organic food and organic consumer goods are known by the buyer who will pay this premium price (now).

The coop is sustained by its membership. The membership is sustained by the coop.